The Kospi surged more than 6% in early trading Wednesday, reclaiming the 7,000 mark for the first time in three sessions, as easing fears of US interest rate hikes and a rally in global semiconductor stocks lifted investor sentiment.
Simultaneous buying by foreign and institutional investors triggered a purchase sidecar, with semiconductor stocks including Samsung Electronics and SK hynix leading the index higher. The Kosdaq also recovered the 800 level, signaling a broader rebound in market confidence.
According to Korea Exchange, the Kospi opened up 226.08 points, or 3.30%, at 7,082.91 and extended its gains from the opening bell. As of 9:25 a.m., the index was up 468.66 points, or 6.83%, at 7,325.49.
The sharp advance triggered a program purchase sidecar — a temporary suspension of program buy orders — at 9:06 a.m. It was the 36th such activation this year. The Kospi sidecar is triggered when the KOSPI 200 futures price rises more than 5% above its reference price and holds that level for one minute, suspending program buy orders for five minutes.
Institutions and foreign investors are driving the rally. Institutions posted net purchases of 174 billion won ($118.4 million) on the day, while foreign investors bought a net 515.5 billion won. Retail investors recorded net selling of 685 billion won.
The domestic market's sharp rise appears to reflect an overnight easing of US rate-hike concerns and a rebound in semiconductor stocks on Wall Street that revived investor appetite. Bargain hunting following the recent steep selloff also contributed.
US consumer prices rose 3.5% year-on-year in June, slowing from 4.2% in May. Markets were also relieved that Federal Reserve Chair Kevin Warsh made no unexpectedly hawkish remarks during his first appearance before Congress.
On Wall Street, the Dow Jones Industrial Average edged up 0.02%, while the S&P 500 and the Nasdaq Composite gained 0.38% and 0.90%, respectively.
Memory chip stocks rebounded across the board. SK hynix's American depositary receipts surged 27.29%, hitting their highest level since listing on July 10. Nvidia rose 4.06%, Micron 4.92%, SanDisk 5.01% and Intel 4.50%.
Tensions in the Middle East continue to simmer, but markets appear to be absorbing the developments for now. The United States launched a naval blockade of Iran from 5 a.m. Wednesday, deploying 20 warships and hundreds of military aircraft, pushing international oil prices up around 1.5%.
In the domestic market, Samsung Electronics and SK hynix were up more than 6% and 11%, respectively. SK hynix, which had fallen below 2 million won earlier this week, climbed back above 2.1 million won. All top market-cap stocks were also trading higher.
The Kosdaq was also recovering. The index opened up 21.73 points, or 2.77%, at 805.71, and had since risen 36.22 points, or 4.62%, to 820.20, reclaiming the 800 mark. The Kosdaq's surge also triggered a purchase sidecar. Foreign investors were net buyers of 15.8 billion won, while retail and institutional investors each posted net selling of between 6 billion and 7 billion won.
Alteogen, the top stock by market cap, was rising as it attempted to recover Tuesday's losses. Ecopro BM and Ecopro were also gaining ground. HLB hit its daily upper limit after the company said Tuesday that the key obstacle behind the US regulatory hold on its liver cancer drug approval had been resolved.
The won strengthened as foreign buying flowed in. The won-dollar exchange rate opened at 1,487.0 won, down 6.0 won from the previous session.
th5@heraldcorp.com
